Elevated interest rates, persistent geopolitical tensions and uneven global growth have kept market uncertainty high through mid-2026. As a result, investors are increasingly focusing on companies with stable cash flows, resilient balance sheets and reasonable valuations instead of richly priced speculative names. Moreover, after the sharp rally in several AI and momentum-driven stocks over the past year, valuation disparities across sectors have widened significantly.
This backdrop has created selective opportunities in fundamentally strong but overlooked businesses, making value investing increasingly attractive for investors seeking downside protection alongside sustainable earnings growth. As soon as other investors start selling their stocks at a cheaper rate in times of market uncertainty, value investors take this as an opportunity to pick good stocks at a discounted price.
Several stocks that have surged significantly in the recent past have shown the overwhelming success of this pure-play investment strategy. Here, we discuss four such stocks - Nexstar Media Group NXST, Murphy USA MUSA, LyondellBasell Industries LYB and Avnet AVT.
However, this apparently simple value investment technique has some drawbacks and not understanding the strategy properly may often lead to “value traps.” In such a situation, these value picks start to underperform over the long run as the temporary problems, which once drove the share price down, turn out to be persistent.
There are many value investment yardsticks, such as dividend yield, P/E or P/B, which are simple and can single out whether a stock is trading at a discount.
However, for investors looking to escape such value traps, it is also vital to determine where the stock would be headed in the next 12 to 24 months. Warren Buffett advises these investors to focus on the earnings growth potential of a stock. This is where lies the importance of a not-so-popular value investing metric, the PEG ratio.
PEG Ratio at a Glance
The PEG ratio is defined as (Price/ Earnings)/Earnings Growth Rate
A low PEG ratio is always better for value investors.
While P/E alone fails to identify a true value stock, PEG helps find the intrinsic value of a stock.
There are some drawbacks to using the PEG ratio. It doesn’t consider the very common situation of changing growth rates, such as the forecast of the first three years at a very high growth rate, followed by a sustainable but lower growth rate over the long term.
Hence, PEG-based investing can turn out to be even more rewarding if some other relevant parameters are also taken into consideration.
Here are some of the screening criteria for a winning strategy:
PEG Ratio less than X Industry Median
P/E Ratio (using F1) less than X Industry Median (for more accurate valuation purposes)
Zacks Rank #1 (Strong Buy) or 2 (Buy) (Whether good market conditions or bad, stocks with a Zacks Rank #1 or 2 have a proven history of success.)
Market Capitalization greater than $1 billion (This helps us to focus on companies that have strong liquidity.)
Average 20-Day Volume greater than 50,000 (A substantial trading volume ensures that the stock is easily tradable.)
Percentage Change F1 Earnings Estimate Revisions (4 Weeks) greater than 5% (Upward estimate revisions add to the optimism, suggesting further bullishness.)
Value Score of less than or equal to B: Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1, 2 or 3 (Hold) offer the best upside potential.
Our PEG-Driven Picks
Here are four stocks that qualified the screening:
Nexstar: It operates television and radio stations across the United States, providing local and national news, sports and entertainment content. The company also owns NewsNation and WGN-AM while offering digital advertising, streaming and multimedia services through various online platforms.
NXST currently has a Zacks Rank #1 and a Value Score of B. Nexstar also has an impressive five-year expected growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA: This is a leading U.S. fuel and convenience retailer operating more than 1,700 stores under the Murphy USA, Murphy Express and QuickChek brands across 27 states. The company primarily operates near Walmart locations and also manages fuel distribution and ethanol production assets.
MUSA currently has a Zacks Rank #1 and a Value Score of B. DVA also has an impressive five-year historical growth rate of 16.6%.
LyondellBasell: This is a global chemicals, plastics and refining company operating across 18 countries. The company produces olefins, polyethylene and polypropylene used in automotive, packaging, construction and electronics industries, generating roughly $30 billion in 2025 revenue.
Apart from a discounted PEG and P/E, LyondellBasell currently has a Zacks Rank #1 and a Value Score of B. LYB has a long-term expected growth rate of 49.4%.
Avnet: It is a global distributor of electronic components and computer products serving customers in more than 140 countries. The company supplies semiconductors, embedded systems and related services through its Electronic Components and Farnell segments to OEMs, EMS providers and resellers.
Avnet has a Zacks Rank #2 and a Value Score of A. AVT also has an impressive five-year historical growth rate of 43.3%.
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Avnet, Inc. (AVT): Free Stock Analysis Report
Murphy USA Inc. (MUSA): Free Stock Analysis Report
Nexstar Media Group, Inc. (NXST): Free Stock Analysis Report
LyondellBasell Industries N.V. (LYB): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).